WASHINGTON, April 29, 2026 — In what is almost certainly the last monetary policy decision of his tenure, Federal Reserve Chair Jerome Powell presided over a divided central bank Wednesday as the Federal Open Market Committee voted to hold the benchmark federal funds rate at 3.5% to 3.75% for the third consecutive meeting — and then walked out of his final press conference with a pointed warning about the institution he is leaving behind.
“Thank you very much, everyone,” Powell said as he put his glasses in his suit pocket and walked out of his final press conference as head of the central bank. “I won’t see you next time.”
The rate decision itself was largely expected. The Fed’s statement acknowledged that “economic activity has been expanding at a solid pace,” but also that “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” Inflation remains elevated, in part because of the surge in global energy prices tied to the ongoing U.S.-Israeli conflict with Iran.
A Divided Committee
What was not expected was the depth of the disagreement within the committee. Four members of the Federal Open Market Committee had dissenting votes, resulting in an 8-4 decision to keep rates steady. Three of the four dissenters did not object to the rate hold itself — they took issue with language in the statement that implied the Fed could ease later in the year, arguing that a dovish signal was premature given current inflationary pressures. The fourth dissenter, a Trump-appointed governor, advocated for rate cuts.
The fracture is significant. Analysts at KKM Financial described the three dissenters as sending a signal to incoming chair Kevin Warsh, characterizing the split as the rest of the committee letting a new leader know the range of views he will be managing when he takes the helm.
Jerry Tempelman, former senior analyst at the New York Fed and vice president of economic and fixed income research at Mutual of America Capital Management, wrote Wednesday that “the ongoing disruption to global commerce, in particular Middle Eastern oil infrastructure and shipping in that region, could result in prolonged pricing stress that trickles through the market.” He added that a rate cut in 2026 appears unlikely unless energy price fallout becomes more severe or the labor market weakens significantly.
Powell’s Unambiguous Farewell
The rate decision was one headline. The other was Powell himself.
In rare, direct remarks that closed his post-meeting press conference, Powell made clear that the legal pressure his institution has faced in recent months — not policy disagreement — is what shaped his decision to remain at the Fed beyond his chairmanship. His term as chair expires May 15, but he confirmed he will stay on the Board of Governors for an undetermined period.
“My concern is really about the series of legal attacks which threaten our ability to conduct monetary policy without considering political factors,” Powell said. “I worry these attacks are battering this institution and putting at risk the things that really matter to the public.”
The Fed chief cited “the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors,” noting that “the things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through.”
The reference was to a Justice Department criminal investigation into Powell, focused on cost overruns in a renovation of the Fed’s Washington headquarters — a probe that U.S. Attorney Jeanine Pirro closed last week, but explicitly left open the possibility of restarting. Powell noted Pirro said “she would not hesitate to restart the investigation.”
By remaining on the board, Powell also denies the Trump administration an opening to appoint a replacement governor — a calculated move that has not gone unnoticed in Washington.
Warsh Clears Committee, Heads to Full Senate
Hours before Powell’s remarks, the Senate Banking Committee voted 13-11 along strict party lines to advance Kevin Warsh’s nomination to lead the Fed. It was the first fully partisan committee vote on a Fed chair nominee in the panel’s history, according to Sen. Elizabeth Warren of Massachusetts.
Sen. Tim Scott of South Carolina, who chairs the Senate Banking Committee, said after the vote: “Kevin Warsh’s leadership is absolutely essential now at the Federal Reserve than ever before. His time as a former governor of the Federal Reserve during the crisis makes him battle-tested and ready to serve.”
Warsh’s path was nearly derailed. Sen. Thom Tillis of North Carolina had vowed to block any Trump nominee for the central bank unless the DOJ abandoned its probe into Powell. When Pirro announced the investigation’s closure, Tillis dropped his hold, clearing the committee majority.
The nomination now goes to the full Senate, where a simple majority is required to confirm Warsh as the 17th chair of the Fed since 1913. The full Senate vote is expected the week of May 11, meaning Warsh could be confirmed before Powell’s term officially ends May 15.
During his confirmation hearing, Warsh vowed to be an independent actor and stated that President Trump had never asked him to predetermine any interest rate decision. Still, just 50% of respondents in a CNBC Fed Survey believe Warsh will conduct monetary policy mostly or very independently, compared with 46% who say he will be only somewhat or not at all independent.
Warsh has also called for what he described as “regime change” at the Fed, signaling potential shifts to economic models, communications strategy, and the central bank’s balance sheet — changes that markets and economists will be watching closely from June onward.
What Comes Next
The Federal Reserve enters a genuine inflection point. The institution Powell hands over is operating under conditions it has rarely faced simultaneously: persistent inflation, Middle East-driven energy uncertainty, political pressure of a kind it has not seen in its modern history, and a leadership transition with deep partisan undertones.
Powell said he plans to “keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair.”
For now, rates are on hold. The next chapter of American monetary policy begins May 15.
